SHL’s first quarter 2005

marked by significant contracts in Germany and US.
Financial performance in line with its expectations.
In Germany,Taunus Betriebskrankenkasse, a Frankfurt based health insurance company, has entered into an agreement for the utilization of the SHL telemedicine solution for their members with chronic heart diseases while in the US SHL entered into an exclusive marketing alliance with St. Jude Medical (the world’s leading mechanical heart valve company) for the promotion of the INR@Home anticoagulation blood monitoring system.

Both of these contracts are expected to generate significant
revenues in the coming years as well as leading to the signing of further contracts with other bodies in these fields.
SHL’s financial performance during the quarter was in line with its expectations.

Revenues amounted to USD 26.2 million, compared with USD 26.6 million in Q1 2004.
Revenues from international operations amount to 73% of the total revenues both in Q1 2005 and 2004 but are expected to increase in the coming periods with the implementation of the overseas contracts. Gross profit amounted to USD 11.7 million compared with USD 12.1 million in Q1 2004, while EBITDA for the quarter amounted to
USD 1.7 million compared with an EBITDA of USD 2.1 million in Q1 2004.

From January 2005, following the application of new accounting principles regarding the treatment of goodwill (IFRS 3 “Business Combinations) SHL ceased amortizing its goodwill and negative goodwill. The major effect of this change is that the costs of the
German operations that were previously netted against negative goodwill created at the time of the acquisition of these operations are now recorded directly in the income statement and have thus caused a significant decrease in SHL’s operating profit (EBIT) which amounted to USD 245,000 compared to an EBIT of USD 1.6 million in Q1 2004.
As a result the loss for the quarter attributable to shareholders amounted to USD 1.3 million which after the effect of the minority interest profit of USD 0.5 million resulted in a net loss for the Company of USD 0.8 million. The net income attributable to
shareholders for the comparable period of 2004 amounted to USD 0.3 million which after the addition of the minority interest profit of USD 0.3 million resulted in a net income to the Company of USD 0.6 million. Loss per share amounted to USD 0.12 compared with earnings per share of USD 0.03 in Q1 2004.

Download Press Release